right on. that's all for this edition of "dateline." i'm craig melvin. thank you for watching. >> good morning, and welcome to street signs. i'm julianna tatelbaum, and these are your headlines. europe hits back at trump. commission president ursula von der leyen says tariffs. >> will. >> trigger firm. >> and proportionate. >> countermeasures after. >> the. u.s. puts a 25%. >> levy on steel. >> and aluminum imports. >> carrying trades. >> near the top of. >> the stoxx 600, as investors look past double digit sales declines, with analysts suggesting the numbers. >> should reassure. >> shareholders that trends are.

>> improving. >> unicredit shares. >> fall despite. >> beating analyst. >> expectations. >> as a. >> key investor. >> reportedly considers. selling a stake in the bank. >> this as. >> the m&a. >> frenzy continues. >> the ceo. >> andre charles. >> speaks exclusively. to cnbc. >> about his commerzbank plans. >> i'm quite. optimistic of being able to convince. >> everybody. >> not only of the premises, of how we got. >> to this investment, but. >> also that a combination between the two banks. >> has massive. >> value. >> to be created. not only for the two banks and the stakeholders. >> but also for. >> germany and for europe. >> and french president emmanuel macron pledges to roll back. >> european red tape at the i. >> action summit in paris, as the bloc battles to keep. >> up with the u.s. and china. >> this summit is not just the announcement of a lot of investment. >> in france. >> it's a wake up call for a european strategy.

>> very good morning to you, and welcome to the program. our top story this morning. tariffs. eu commission president ursula von der leyen said she deeply regrets the u.s. decision to impose tariffs, adding they will not go unanswered and the bloc. >> will trigger. >> quote, firm and proportionate countermeasures. this comes after. >> the eu trade. >> commissioner, maros sefcovic, said the eu remains committed to finding mutually beneficial solutions with the trump administration. so there you. >> have. >> on your screens the response. >> from the. eu so far. >> a bit of a placeholder, i would say, in terms of what may come next from the eu. we don't yet know what that will look like. and we also don't know whether these tariffs will in fact come into effect. we have the president of the united states yesterday confirming the plan to impose these 25% levies on steel and aluminum imports. they haven't come into effect yet. >> and will.

>> we see any negotiating between. >> now and when they do come into effect? that is one of the key questions. and will this response from the eu trigger negotiations? we will discuss more on the program. for now, though, let's take a look at markets and what the reaction has been to this back and forth on tariffs. we are looking at fairly muted trade at the headline level. it is a mixed bag when. >> you look. >> under the hood in europe, stoxx 600 currently trading around the flat line after moving higher yesterday. so tariffs certainly front of mind for investors dominating the agenda from a macro perspective and weighing on basic resources stocks in particular. but we do have a number of single stock stories also in focus today. so investors still care very much about the bottom up. so here's a look for you at some of the big individual movers unicredit in the banking space in focus today after delivering earnings the shares are down. we're now down 3.3%. so trading sharply lower despite a beat in terms of in terms of earnings bp also in

focus the oil major delivering their earnings today and pledging a fundamental reset of their strategy as part of that release, but not giving a huge amount away. they have a capital markets day coming up later this month, and of course, that comes after the reports out earlier this week over the weekend, in fact, that elliott has taken a stake in the oil major carrying trading right at the top of the board this morning, 2.4% higher. we were up more than 6% at one stage after the luxury. group delivered their earnings. and effectively, the message not as bad as feared from the investment community. dsm in the chemicals space also in focus. some news there. the company has announced a sale of its stake in its joint enzymes venture with novo novonix to novonix for ■k75 billion. so fairly transformational there, and you can see novo shares are up more than 1% this morning. so a lot to play for in markets from a single stock perspective. let's get back to. >> the macro. >> though, and what's happening at an overall market level with

cole smead ceo of smead capital management. cole, thanks for being with us this morning. let me come to you first on tariffs, given we've got this fresh response out of ursula von der leyen this morning to the new tariffs that have been announced from the trump administration, would you expect any other response from the eu at this stage? threatening countermeasures, saying we will respond with a proportionate reaction or with a proportionate response. would you expect anything less? and what's your what's your take? >> yeah, and thanks. for having me. >> so there's. >> a lot of saber rattling goin. >> on the weird part. >> and i think the theory that we've really. >> operated under is. >> that. >> what trump's pushing. for will have very little marginal effect. >> on america. >> in other words, if the tariffs go through, they will raise prices. that will. >> obviously be inflationary. >> but the reality. >> to the situation. >> is trump. >> pressing for these changes won't. >> help america.

>> that much. because we. >> are a fairly. >> open market compared. >> to most. >> economies around. >> the world. >> if trump is successful in getting europe to lower their. >> own market access barriers, it will actually. >> be. >> a massive boon. >> and savings for the european consumer. >> and i. >> i haven't really been hearing. >> anybody talk about that, but there's a. >> lot of protected. industries as you go into parts of the european. >> economy, and. >> all that really. >> does is just causes higher. >> consumer pricing because the markets. >> are. you know, are limited. it is david. ricardo's comparative advantage. >> at play. and, you. >> know, with. >> america tending to like cheap prices and being. >> one of the. >> largest consumers in the world, we. >> tend to. >> not protect our markets. >> like. >> others have. >> cole, tell me a little bit more about what you mean by what trump wants to get out of europe. what would it take to get trump to the negotiating table from a european perspective? and what leverage. >> does. >> europe have?

>> yeah. >> i mean, in. >> some respects, you know, one of the. >> primary leverage points that the world. has relative to the united states is. >> that they haven't. >> been borrowing money like drunken sailors on leave. >> like we have for two years. okay. >> coming out of. >> the. >> pandemic, many global. >> governments borrowed. >> money to get through the near term impact of what went on in the economy. tied to the pandemic. two years in, many governments. quit in our country, we continue to go on. >> 7 to 8%. >> debt binges as a percentage of gdp, and we've continued to do that. so this idea of american exceptionalism, it is not you are not an exceptional country if you just. borrow more money than everyone else, except that when you're the reserve currency and. >> that gives you. >> certain rights to. >> borrow at terms that others can't get. people believe you have. something special. >> about you. >> i think really, in the long run, we are going to. >> have. to deal. >> with our debt and that is. >> beneficial from. >> a negotiation perspective. as you think over the next 3 to 5 years, in the next six months,

not much probably is going to change on that. and so they're going to have to deal. with this fairly head on. but use use the discussion of tariffs in canadian oil, for example, which had been announced for 10% and then were backed off the following day. we are too reliant on canadian oil. and i say that because if you look at american production, we're doing 10 million barrels a day. >> that we've. >> grown in the last 20 years here. 4 million barrels come here from canada. we can't. produce that. there is. >> no capex. >> to go find that, that, that that would take a decade to even vaguely get to. and the reality is we're very lucky that we have that supply coming across from places like calgary that we can't. >> replace coal. let me ask you a little bit more. >> about the european. >> side of things. europe is seen under tremendous pressure here from the steel industry perspective. the industry's already faced a ton of basically in a lot of trouble before these tariffs have even come into the picture. how big of a blow will it be if we do see these tariffs actually come through 25% on

aluminum, 25% on steel for europe. >> yeah i use. >> the recent. tumult at at. volkswagen just as an example. >> of. >> europe's, you know, kind of. >> problem at this point. so i. >> would say that europe's biggest problem in many ways is still just reforming its labor markets. look at that whole discussion in volkswagen's case, which was that they know that they're producing. subpar returns. and the only way they can really rectify that is move the production of cars closer to where the consumer is, which would obviously be moving to places like the united states. they have been fairly unwilling to do that. they are going to take some job cuts and try to keep plants open. but but that is not europe's competitive advantage today. they don't sell many cars in their local markets, and therefore the labor shouldn't really be tied to cars that are sold halfway around the

world. europe is unwilling to give up on that, and until they get more pain, that might not change at that. discussion into the idea of tariffs. okay, what you're going to see is that you're going to see certain products that may not be produced at the level we saw in the last ten years, or in some cases, maybe not. again, because the cost to move goods has gone up a lot since the beginning of the pandemic. and that's really putting europe in this moment of not being the crossroads of east and west, but really being maybe the most expensive place to manufacture and then ship to east or west. and so i think, i think that's really what's at play with europe. i think as we see the snap elections in germany, that's playing a lot into some of these discussions, you know, with companies like volkswagen. but, you know, i think i think europe's got a lot of questions to ask. i think they'll they'll answer those correctly. but again, the old saying is never let a good crisis go to waste. and i don't think europe should let this crisis, you know, not cause them to reform and, you know, meet the market practice that that

they see in other western countries like the united states. >> well, that's certainly an optimistic take. we'll see if europe can do that. cole, while i've got you, i'd love to get your view on bp. it's one of the single stocks were eyeing today. they've come out with their earnings and they said they are going to do a major reset in terms of their strategy, but they didn't really give a whole lot away. obviously, under pressure from reports that elliott has now taken a stake, what do you think happens next. >> at bp? >> and if we do in fact, have elliott now on the shareholder roster, what does that change in terms of the future trajectory of bp? >> yeah, elliott's view is pretty simple, i think. go back and look at what they did at marathon petroleum. go back and look at their involvement with suncor. now look at what they're involved with bp. there's also a report that they have a larger stake in phillips 66. the oil business has tend to be dominated by vertically integrated companies. upstream assets like the production, midstream like the pipelines and downstream like the refiners and

the marketing. the issue is they're actually not good at all. three typically, it's very rare. and as you've seen, businesses focus in on what they're good at. you know, one of those various three assets i just mentioned, you'll find better returns on capital. so for example, conocophillips is an exploration production company and they're really good at that. and they produce really good returns on that. it's very unlikely you'll find someone that does that and one other thing and tends to be successful. so i think what they're going to push bp to do is they're going to take their upstream assets, put them on their own, they're going to take their downstream assets, any pipeline assets, and put them in their own place. bp is dealing with debt that they got to extinguish in some way, shape or form while not hurting their returns. and they were big on the power business. and that hasn't worked out so well as that. you know, a lot of the esg initiatives that they pushed a few years ago in their capital markets say are gone. so i think you're going to see the oil business really defragment out into those asset buckets. but i think it also explains that the returns in the oil business are going higher because, you know, on the margin, those efforts

will be successful. and any time those assets have been focused, their returns on capital go higher. and one thing i'll add, you know, the idea that people being focused on their business can't drive higher returns, that same discussion that we just had in the oil business is exactly what you're seeing in unicredit's business, who reported this morning, too? they've been very focused on what they do. they want to consolidate and focus on that more with the banks they'd like to go into. and i think you're going to see higher returns there too. so this is not a unique thing to energy. it's happening in financial services too there in europe. >> cole, thank you so much for joining us this morning. cole smead, ceo of smead capital management. you are looking there at live shots from paris at the grand palais. we've got president macron just arriving. he is going to be delivering remarks to the ai action summit taking place in the capital city. he is greeting ursula von der leyen there, the european commission president. she has had quite a busy morning issuing these remarks around the european response or the expected response to the us

trade tariffs. and if you just saw a moment ago, we also have the vice president of the united states, jd vance, there. so in close proximity to ursula von der leyen, will they have a chance to meet on the sidelines? and will tariffs feature in the conversation? certainly something that is front of mind there. you can see president macron making his way around to the various guests. we've also got narendra modi, the leader leader of india. they're due to give remarks as well. so many, many government and corporate leaders in. paris today. we fortunately have our very own arjun kharpal there and he has been reporting over the last couple of days. he's in the heart of all the action. arjun, give us a sense of what we can expect from the french leader today. and what's the mood been like on the ground in paris? >> yeah, well. >> just been watching the. the leaders. >> arrive behind me. >> look, we're going to expect. >> from president macron. >> today to. continue to. >> tout france. as a place. >> for investment. >> are coming off the. back of that. >> more. >> than ■k7100. >> billion. >> ai investment he's announced

as well. and so the i think the. >> commentary here is really around. >> us and china have been forefront of the conversations around ai. >> but where. >> does europe stand? and i think europe, led by macron here, is. >> trying really. >> to brush. >> off that idea as. europe has anti-innovation and too. >> heavy on the regulation to an area which. >> can. >> really thrive. >> in terms of ai. >> so that's what we can. >> expect to hear. and of. >> course. >> just throwing. >> a. spanner in the works, as always. >> is elon musk. who's proposed this. >> big bid. >> for the nonprofit arm of. >> openai. >> nearly ■k7100 billion. >> i've been. >> trying to. >> get a bit of reaction. >> to that. >> what does the industry. >> think about. >> elon musk's proposal? i had a chance to catch up with. >> clément delong, who is. >> the ceo. >> of hugging. >> face, to get his. >> take on it. let's listen in. >> it's hard to tell, right? >> i think we don't have a lot of details about. exactly what's happening, why why it's happening. i don't think it matters too much. i think i try to focus more on like. >> the real. >> ai building, building stuff.

>> but it's really interesting to see that ai is getting so much of the spotlight these days, and people are talking so much about these kinds of transactions. >> but he says. >> that he wants. >> to. >> return openai to this open source for good. >> initiative, that that's surely a positive. >> that would be amazing. >> of course. >> like if you could have a company like openai contributing more to open science, to open source ai, it could have a massive impact in the world. right? we're seeing that with dopesick right from a relatively small organization, thanks to the power of open source, by releasing the weights openly, they've had a massive impact on the world already three weeks after releasing. so if a company like openai could be could be doing the same thing, it would really be impactful for the world. >> so you would support it. >> elon musk bid. >> on openai. >> i don't know, it's hard to know without the details, but anything more open i would support for sure. >> one of elon. >> musk's rationales for. >> for proposing.

>> such a deal. >> is the idea. >> to return. openai back to. >> open source. >> roots, and huggingface. >> is a big proponent. >> of open source technology. >> and you heard the ceo saying. >> that if openai did move in that direction. >> it. >> could be pretty big for. >> the industry. >> the other point you heard clément. >> delong mention there as well. >> was around deep sea. >> this has been a big topic of conversation. >> because of. >> the efficiencies it. >> showed with. >> its ai model on slightly. >> older or less advanced nvidia. chips as well. and so the. focus here. >> now is what. >> happens to. >> these models is bigger and bigger and bigger, always better as. >> openai is showing. >> or actually. >> is there a need. >> for. >> a new way to think of these models? >> one of the companies. >> doing that is sakana. >> ai, a japan founded company. as well. and they've raised money from a number of vcs at this point, but they're trying to develop a ai model based on nature. that's according to the co-founder, cleon jones, who i

spoke to earlier today. let's listen to what he had. >> to say. >> two ways to make progress. you can either scale or you can try to improve the algorithms. so we're. >> concentrating on. >> improving the algorithms now because there are plenty of other people. >> doing the. >> scaling, and we still benefit from that, right? we make heavy use of the closed source llms in our research. >> right? >> our our ai scientists wouldn't work. >> without access. >> to claude or gpt four. right. so we can we can benefit from the scaling without having to spend all that money. and then concentrate. >> on the. >> algorithmic improvements. >> but that doesn't mean. >> we don't believe in scaling, right? i'll tell you. >> the second we find. >> something. >> interesting, maybe in the nature. >> inspired direction that is worth. >> scaling. >> we won't hesitate just. to the. >> sort of ai technology. >> has been. >> dragged very much. >> into the geopolitical game here. and there's conversations here. >> the us versus china. what's

europe's position? you you. >> live in japan. >> you founded. this company. >> in japan. >> where does japan. >> sit now. >> as sort of ai becomes more and more. focused around sovereign ai. and some of these conversations around geopolitical borders. >> yeah, i think. >> the idea was that we wanted to make. ai a bit less centralized, right? i mean, people. >> thought we. should have started a company. >> in america, right? so say. >> we would have. >> an. >> easier time. >> hiring people, for example. i think the opposite is true. like people. >> want to come to japan, right? and. >> you know, the sort of people that we want. to hire, particularly like japan, i think. so i think it's very important to have sovereign ai in japan. and, you know, it's definitely the sort of country that's. >> very accepting of this kind of technology. >> so deep. >> tech really. has prompted. >> a rethink on efficiencies.

>> of these. ai models and actually how. >> maybe these. >> bigger and bigger. >> models aren't always necessarily the right architecture going forward for certain applications. >> so there's a. >> lot of innovation happening. >> in this space. >> there's going to be continued changes happening at rapid pace from what i'm what i'm understanding here and what i'm gleaning. and so whilst deep sea was a big shock this year. it probably won't be the last shock to. >> come to the ai world. >> giuliana. >> right, right beside you, viewers can see president macron has taken the stage. he's speaking in french, addressing the audience right now. if he does switch to english, we will bring you some a live feed of those comments. but raj, you have been talking a lot about you and everyone in the tech world have been talking about the ai race between china and the us. but this ai action summit is actually co-hosted by president macron and prime minister modi of india. you just saw him in the front row with president macron. where does india fit in here? you can see them embracing right there narendra modi just taking the stage. now where does india fit in the global ai race.

>> so india. >> has been. >> a very. >> interesting case study in tech. >> over the. >> past couple of. >> years because under. >> modi's leadership, they've really tried. >> to bring in foreign investment. >> in particular. >> us companies. >> as well, to. >> invest in the country. and you see that with. >> the likes of. >> apple. >> amd and many others in the india tech scene. >> and ai. >> is no different. india is attempting very much to continue to invest in its infrastructure. >> but doing so by. >> leaning on some of these world. leading companies in the space as well. and so. you know, you can. >> expect, i think, from. >> modi and the indian government to continue to tout india as a. place for investment, particularly for us companies as well. you know, at the moment, i think india is still figuring out what its. ai startup scene looks like at this point. you know, it's very clear that a lot of the leading players right now are still in the us. they're in china at this point. europe is attempting to create some key players in terms of the ai model space as well. >> i think. >> that what india is doing is

going to be closely watched next. but it's going to be clear. i think modi will continue to tout india as a place for investment for ai art. >> let's take a listen to what the prime minister has to say. narendra modi. >> an image. >> of someone. >> writing with their. >> left hand. the app will most likely draw. someone writing with. >> the. right hand. >> because that. >> is what. >> the training. >> data is dominated by. it shows that while the positive. potential of ai is. >> absolutely amazing. >> there are many biases that we

need to think carefully about. that is why i am grateful to my friend. >> we are going to pull away from paris. narendra modi, the indian prime minister, speaking there addressing the ai action summit, will keep an eye on any headlines as and when they come through. but for now, we're going to take a break. when we come back, we're going to be talking unicredit. stay with us.

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and growth in fees expected to offset a decline in net interest income. silvia joins us now from milan. she's been poring over the numbers all morning, and she's been speaking exclusively to the head of unicredit, andrea. andrea orcel silvia, there is so much going on at unicredit. it feels like the numbers are just a small piece of the puzzle here. they've got their bid for bpm on the table. the investment in commerce bank, the 4.1% stake in generali. what about the numbers themselves? why is the stock down today? >> so there could be. >> several reasons here, giuliana. one of them is the reports that we're getting this morning that one of the key investors in unicredit has actually decided to sell some of the stake in some of the positions in unicredit. when you also look at what else unicredit said this morning. yes, they highlighted that revenues are likely to come down in 2025, given the fact that we are in a new environment in terms of interest rates, they are

expected to come down and therefore that could have an impact on the business of unicredit as well. however, though, when you actually step back and digest all of the figures in this statement, this was another set, a strong set of numbers for the bank. whether you look at it on an annual basis or a quarterly basis, they deliver the top and bottom line beats today for the full year and the quarter as well. however, though there is a lot of interesting stories when you think about unicredit, it's not just about the business and the numbers, it's also about what they're trying to do in terms of consolidation. there's a question mark as to whether they will have to increase their bid for banco bpm here in italy. and on top of that, what the german election is going to mean for unicredit's plans in terms of potentially buying commerzbank, the second largest lender in germany as well. here's andrea orcel addressing what he would like to see from the german election.

>> we made. >> that investment on certain premises. >> those premises. unfortunately changed. >> we have elections. the elections were accelerated. >> which is a good thing. >> in general. >> not only because. >> of us. and we're waiting to see the. >> completion of those elections, the formation of a new government, to. >> have an opportunity to sit. down and. >> review facts. >> and review. and in my opinion, i'm quite optimistic. >> of being able. >> to convince. >> everybody, not only. >> of the premises. >> of how we got. >> to this investment, but. >> also that. >> a. combination between. >> the two bank has massive. >> value to be created. >> not only. >> for the two. >> banks and. >> the stakeholders. >> but also for germany. >> and for europe. >> so i'm. >> waiting to see. >> when that opportunity. >> will be. >> it will take time, and that. >> time, i think, will also give us an opportunity to see. >> what the new. >> plan for. >> of commerzbank is. more importantly. how is it going. >> to be executed? >> because if you do your. >> math. >> it is. >> unlikely that we. >> would move before.

>> 3 or 4 quarters if that. >> and that means. >> that differently from what. >> we have. at bpm at the moment, there will be. >> plenty of time to monitor. actual delivery of the plan. >> and. >> you know, commerzbank needs to be structurally reshaped. everybody tends. >> to agree with that. >> they miss their last two plans. >> so execution is. >> front and center of what we want to see. >> so you'll be paying a lot of attention to what they say in two days time. >> well. >> i would say more. >> than a lot of attention. >> on what they say is because we expect. like. >> in. >> all. of these situation. the plan to be optimistic. the question is, does it address their structural deficiencies? and secondly, more importantly, are. >> they capable. >> to execute quarter after quarter after quarter? that is what we will. >> be more. >> focused on. >> now. i also. >> asked andrea orcel whether the problem in trying to buy commerzbank is actually the idea in germany that if something

goes wrong with unicredit, it would be german taxpayer money that would have to come to the rescue. this is also because of the uncertainty, to some extent, of whether we're actually going to get a full banking union in the eurozone. and he made the comment that, you know, fortunately or unfortunately, we would be dealing with a german regulator. this would be a deal in germany. and therefore he does not believe that there's a basically an argument here behind that idea. let's see how these conversations will unfold post the german election. julian. but when you take a step back and you look at today's message from unicredit, it is increasing the returns for shareholders. we are trying to buy two different banks. but listen, we are going to continue to deliver for the shareholders. so let's see how the markets will continue to digest that message. thus far, though, we are seeing a little bit of pressure for the shares. >> sylvia, thank you for bringing us that interview and breaking down the share move we're seeing today. we're going to be speaking a little bit more

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sell with shopify. start your free trial today. cnbc's trusted resources. keep your future in focus. cnbc live ambitiously. >> welcome back to street signs. i'm julianna tatelbaum, and these are your headlines. europe hits back at trump commission president ursula von der leyen saying tariffs will trigger firm and proportionate countermeasures after the us puts a 25% levy on steel and aluminum imports carrying trades near the top of the stoxx 600 as investors look past double digit sales declines, with analysts suggesting the numbers should reassure shareholders that trends are improving. unicredit

falls despite a top and bottom line beat, as a key investor reportedly considers selling its stake. and as m&a speculation continues, ceo andrea orcel discusses commerzbank exclusively with cnbc. >> i'm quite. >> optimistic of being able. to convince everybody. not only of the premises. >> of how we. >> got to this. >> investment. >> but also that a. >> combination between the two banks has massive value to be created, not only for the two banks and the stakeholders, but also for germany. >> and for europe. >> world leaders arrive at paris i action summit, with french president emmanuel macron pledging to roll back european red tape as the bloc battles to keep up with the us and china. >> this summit is not just the. announcement of. >> a lot of investment. in france. >> it's a. >> wake up call. >> for a. >> european strategy. >> european equity markets this morning. a bit of a mixed bag. a

lot going on at an earnings level and at a top down macro perspective. we've got tariffs to contend with. with europe now hitting back at the us saying to expect countermeasures, a proportionate reaction from the eu to the us moving forward with these new 25% tariffs on aluminum and steel imports. so here's the picture. xetra dax trading slightly above the flat line. ftse 100, the cac40 and the ftse mid all trading slightly weaker this morning now. caring is a bright spot in the market. fourth quarter sales at luxury house caring fell 12% on a comparable basis, hit by a 24% decline in sales at its flagship brand gucci. the conglomerate reported slight improvements in the us and china, though, with the ceo saying it has reached a point of stabilization. charlotte joins me now around the set with more charlotte. i was just having a look at caring share price over the last year and over the last year. it's a pretty dire picture, down nearly 40%. but year to date shares have actually been okay, 6% higher.

what is the story today? shares have moved higher. is this a matter of the worst? is behind us for caring, or simply that the numbers weren't as bad as feared? >> so mostly the second part, things were not as bad as expected. and here again, that's why they've been trading so much lower that some of the other luxury players, because of course there is a slowdown in luxury. but there was also a turnaround happening at gucci and the turnaround. >> that. >> hasn't been bearing fruit just yet. but look, the different brands where they sell better in q4 than q3, bottega veneta, other houses like balenciaga, everything is going. in the right direction. but when we look, of course, at the star brand, which is gucci makes half of their revenue and two thirds of their operating profit, we're not there just yet. they were still down 24% in q4 after being down 25% in q3. but we kind of knew there were bad news coming into gucci, because last week they announced that the creative director, sabato di sarno, was ousted after just a year and a half in the job. so clearly giving an indication that the turnaround a change of esthetic,

more quiet luxury to the flamboyant side that we had under the previous creative director, alessandro michele, was not happening. they also, you know, hiked prices quite aggressively and it looked like customers just didn't take on the new gucci. so now we know they're looking for a new creative director. we have to wait and see who that might be. but there is a new ceo in place since january, so kind of things are in place for a potential turnaround at gucci. but we have to wait and see. but certainly for the other parts of the business, it looks like things are going in the right direction. and when they're given one of their multiple profit warning last year, they gave a guidance on their recurring income, and that came a little bit better than expected in the second half. not as bad as expected, maybe. so, you know, maybe given the green shoots that we've seen with other luxury players, particularly in north america, investors think that maybe there is potential for a turnaround, but the jury is still out forgetting again, you were saying shares were down 40% last year, much lower than other luxury players. so it's all about the new creative director. the magic has happened before with gucci, whether it was tom

ford or alessandro michelini. you know they came in and changed and make these, these brands very desirable. we have to wait and see who can create the magic again. >> when we talk about luxury, we often talk about it as a blanket sector, but actually within luxury there's different segments, and gucci goes after the affluent consumer, not the super wealthy. could we see a change in who they're actually targeting with this new creative director? is there talk of that, or is it simply going to be a change of the style? >> well, that's what's really interesting that we've seen the downturn, the brands catering to the most affluent buyers, whether it's hermes, for example, brunello cucinelli has been doing better because downturn doesn't affect them as much. but that means that the aspirational buyer has been squeezed out a lot. and gucci typically was a brand that was very much exposed to the aspirational buyer. so the response to battle of these brands is just putting their prices up and trying to get to the most affluent buyers. but you can't just do that. you know, not everybody is an hermes. not everybody can can switch this quick. so and you leave out a big chunk of consumers as well that, you

know, have turned to eyewear or beauty, but it doesn't make up as much. you know, normally the stepping stone to luxury is buying a bag. well a lot of buyers are not able to do that anymore. so there's a question of where do they go? how much higher do they want to go? higher? the exclusivity, yes. but to what point is always trying to strike that fine balance of being desirable, exclusive, but not completely squeezing out aspirational buyers. and it can be tough to reach that mark. >> and what about china? i mean, china was a key part of why kering has suffered in recent years, the failure of the chinese market to rebound post-covid buyers just didn't come back to carrying the way that it that they had before. how was the chinese market doing, and to what extent does that determine where the stock goes from here? >> so they were saying this morning the management of caring for gucci in particular, that's very exposed to the chinese buyer. they said they saw a sequential improvement in asia pacific. so again we'll have to wait and see. but we know for a lot of the luxury groups it's still difficult in that market. they're waiting to see there's

some stimulus putting into place. they said maybe things will get better. but what we heard from the bellwether of the sector, lvmh, is that they expect they will take at least a couple of years before we actually see the chinese buyer really coming back into play. we know there's just a change of attitude towards brands, towards towards logo. a lot of chinese buyers are turning towards experiences as well. so, you know, there's potentially also a shift in buying habits from the chinese consumer as well. so we're kind of a bit of a wait and see situation when it comes to the chinese market. >> so it's not a matter of losing market share to competitors necessarily in china, but losing market share to alternatives. yeah. >> yeah, absolutely. that's the thing. for a lot of the luxury buyers, it's do you still have the must have brands and the must have items. and there's a fight over which brand can this be. it used to be gucci. it's not anymore. so which brand do they go to. but also yes, a lot of people because it's become so much more expensive to buy luxury. you know, you think twice before spending that money. do you want to spend that money on a bag, or do you want to spend that money on a holiday? and sometimes it's the same cost. so, you know, a lot of buyers, whether it's china or

in europe, are really thinking twice before buying those luxury items. they have to make it worthwhile. >> and what about if, you know, there's so much uncertainty because we don't know who the next creative director of gucci is going to be. and in the luxury space, there's always talk of m&a. we know lvmh has been a huge buyer. obviously the behemoth there. but what is the risk for caring of, you know, as a target if they don't convince the market that they can turn things around at gucci? >> well, we'll have to wait and see. a lot of these luxury players have their own, you know, work doing, whether it's burberry doing their own revamp, lvmh, they're working on revamping dior. they sing a bit of slowdown. so, you know, they will have their own thing going. so there might not be m&a just yet. where we know for caring is that, you know they they're looking potentially some segments where they're not as present. could it be jewelry. we have to wait and see. but a lot of people are giving them the benefit of the doubt when it comes to caring. they have bought stakes in valentino. they have bought stakes in creed,

which is perfumed with beauties, and a segment that they also say there are bits in play for them to have new avenues for revenue. and so we'll have to wait and see there. >> charlotte, thank you for breaking it all down for us. great to have you on set. i want to bring your attention back to paris, where jd vance, the us vice president, has now taken the stage and is addressing the audience today. >> and i, of course, want to thank prime minister modi for being here and for co-hosting the summit for all of you. for participating. and i'm not here. >> this morning. >> to talk about ai. >> safety. >> which was the title of the conference a couple of years ago. i'm here to talk about ai opportunity. when conferences like this convene to discuss a cutting edge technology, oftentimes i think our response is to be too self-conscious, too risk averse. but never have i encountered a breakthrough in tech that so clearly caused us to. do precisely the opposite. now, our. >> administration. >> the trump administration, believes that ai will have countless revolutionary

applications in economic innovation, job creation, national security, health care, free expression. and beyond, and to restrict its development now would not only unfairly benefit incumbents in the space, it would mean paralyzing one of the most promising technologies we have seen in generations. now, with that. >> in mind. >> i'd like to make four main points today. number one, this administration will ensure that american ai technology continues to be the gold standard worldwide, and we are the partner of choice for others, foreign. >> countries. >> and certainly businesses as they expand their own use of ai. number two, we believe that excessive regulation of the ai sector could kill a transformative industry just as it's taking off, and will make every effort to encourage pro-growth ai policies. and i like to see that deregulatory flavor making its way into a lot of the conversations. this this

conference. number three, we feel very strongly that i must remain free from ideological bias and that american ai will not be co-opted into a tool for authoritarian censorship. >> and finally. >> number four, the trump administration will maintain a pro-worker growth path for ai. so it. >> can be. >> a potent tool for job creation in the united states. and i appreciate prime minister modi's point. i, i really believe will facilitate and make people more productive. it is not going to replace human beings. it will never replace human beings. and i think too many of the leaders in the ai industry, when they talk about this fear of replacing workers, i think they really miss the point. ai, we believe, is going to make us more productive, more prosperous, and more free. the united states of america is the leader in ai, and our administration plans to keep it that way. the us possesses all components across the full ai

stack, including advanced semiconductor design, frontier algorithms, and of course, transformational applications. now, the computing power of this stack requires is integral to advancing ai technology and to safeguard america's advantage, the trump administration will ensure that the most powerful ai systems are built in the us with american designed and manufactured chips. now, just because we're the leader doesn't. >> mean. >> we want to or need to go it alone. of course. and let me be emphatic about this point. america wants to partner with all of you, and we want to embark on the ai revolution before us with the spirit of openness and collaboration. but to create that kind of trust, we need international regulatory regimes that fosters the creation of ai technology rather than strangles it. and we need our european friends in

particular, to look to this new frontier with optimism rather than trepidation. now, the development of cutting edge ai in the us is no accident. by preserving an open regulatory environment, we've encouraged american innovators to experiment and to make unparalleled r&d investments of the $700 billion, give or take, that's estimated to be spent on ai in 2028. over half of it will likely be invested in the united states of america. now, this administration will not be the one to snuff out the startups and the grad students, producing some of the most groundbreaking applications of artificial intelligence. instead, our laws will keep big tech, little tech, and all other developers on a level playing field. now, with the president's recent executive order on ai, we're developing an ai action plan that avoids an overly precautionary regulatory regime while ensuring that all americans benefit from the

technology and its transformative potential. now, we invite your countries to work with us and to follow that model. if it makes sense for your nations. however, the trump administration is troubled by reports that some foreign governments are considering tightening the screws on us tech companies with international footprints. now, america cannot and will not accept that. and we think it's a terrible mistake, not just for the united states of america, but for your own countries. now, us innovators of all sizes already know what it's like to deal with onerous international rules. many of our most productive tech companies are forced to deal with the eu's digital services act and the massive regulations it created about taking down content and policing so-called misinformation. and of course, we want to ensure the internet is a safe place. but it is one thing to prevent a predator from preying on a child on the internet, and it is something quite different to prevent a

grown man or woman from accessing an opinion that the government thinks is misinformation. meanwhile, for smaller firms, navigating the gdpr means paying endless legal compliance costs or otherwise risking massive fines. now, for some, the easiest way to avoid the dilemma has been to simply block eu users in the first place. is this really the future that we want? ladies and gentlemen, i think the answer for all of us should be no. there's no issue where we worry about more than regulation when it comes to energy. and again, i appreciated the comments of so many at the conference because they recognize that we can't. we stand now at the frontier of an ai industry that is hungry for reliable power and high quality semiconductors. yet too many of our friends are deindustrializing on the one hand and chasing reliable power out of their nations and off their grids with the other. the ai future is not going to be won

by hand-wringing about safety. it will be won by building from reliable power plants to the manufacturing facilities that can produce the chips of the future. now, at a personal level, what excites me most about ai is that it is grounded in the real and the physical economy. the success of the sector isn't just a matter of smart people sitting in front of a computer screen and coding. it depends on those who work with their hands. even as robotics will change our factories, it will certainly make our health care providers better at treating diseases. but it will also depend on the data produced by those health care providers, by those doctors and nurses. i believe it will help us create and store new modes of power in the future, but right now, i cannot take off unless the world builds the energy infrastructure to support it. now, it's my view

that tech innovation over the last 20 years has often conjured images of smart people staring at computer screens, engineering in the world of bits. but the ai economy will primarily depend on and transform the world of atoms. now, at this moment, we face the extraordinary prospect of a new industrial revolution, one on par with the invention of the steam engine or bessemer steel. but it will never come to pass. if overregulation deters innovators from taking the risks necessary to advance the ball. nor will it occur if we allow ai to become dominated by massive players looking to use the tech to censor or control users thoughts. and i'd ask if you step back a moment and ask yourself who is most aggressively demanding that we, meaning political leaders gathered here today, do the most aggressive regulation? it is very often the people who

already have an incumbent advantage in the market. and when a massive incumbent comes to us asking us for safety regulations, we ought to ask whether that safety regulation is for the benefit of our people, or whether it's for the benefit of the incumbent. now, over the last few years, we've watched as governments, businesses and nonprofit organizations have advanced, unpopular and, i believe, downright ahistorical social agendas through ai. in the us, we had ai image generators trying to tell us that george washington was black, or that america's doughboys in world war one were, in fact, women. now we laugh at this now. and of course it was ridiculous. but we have to remember the lessons from that ridiculous moment. and what we take from it is that the trump administration will ensure that ai systems developed in america are free from ideological bias, and never

restrict our citizens right to free speech. we can trust our people to think, to consume information, to develop their own ideas, and to debate with one another in the open marketplace of ideas. now, we've also watched as hostile foreign adversaries have weaponized ai software to rewrite history, surveil users, and censor speech. this is hardly new, of course, as they do with other tech. some authoritarian regimes have stolen and used ai to strengthen their military intelligence and surveillance capabilities, capture foreign data, and create propaganda to undermine other nations national security. i want to be clear this administration will block such efforts full stop. we will safeguard american ai and chip technologies from theft and misuse, work with our allies and partners to strengthen and extend these protections and

close pathways to adversaries, attaining ai capabilities that threaten all of our people. and i would also remind our international friends here today that partnering with such regimes, it never pays off in the long term. from cctv to 5g equipment, we're all familiar with cheap tech in the marketplace that's been heavily subsidized and exported by authoritarian regimes. but as i know and i think some of this, some of us in this room have learned from experience, partnering with them means chaining your nation to an authoritarian master that seeks to infiltrate, dig in, and seize your information infrastructure. should a deal seem too good to be true. just remember the old adage that we learned in silicon valley if you aren't paying for the product, you are the product. finally, this administration wants to be very clear about one last point. we will always center american workers in our ai policy. we

refuse to view ai as a purely disruptive technology that will inevitably automate away our labor force. we believe, and we will fight for policies that ensure that ai is going to make our workers more productive, and we expect that they will reap the rewards with higher wages, better benefits, and safer and more prosperous communities. from law to medicine, manufacturing, the most immediate applications of ai almost all involve supplementing, not replacing, the work being done by americans. now, combined with this administration's worker first approach to immigration, we believe that a us labor force prepared to use ai to its fullest extent will instead attract the attention of businesses that have offshored some of these roles. to accomplish this, the administration will make sure that america has the best trained workforce in the world.

our schools will teach students how to manage, how to supervise, and how to interact with ai enabled tools as they become more and more a part of our everyday lives. and as ai creates new jobs and industries, our government, businesses and labor organizations have an obligation to work together to empower the workers not just of the united states, but all over the country, all over the world. to that end, for all major ai policy decisions coming from the federal government, the trump administration will guarantee american workers a seat at the table. and we're very proud of that. now, i've taken up enough of your time, so i'd like to close with just a quick story. this is a beautiful country, president macron, and i know that you're proud of it and should be. and yesterday as i was touring les invalides with general gravet with my three kids, he was kind enough to show me the. >> sword. that is. >> u.s. vp.

>> jd vance, speaking in paris at the i action summit. in terms of what he has said, delivering a strong message that yes, the us wants to partner with the rest of the world and building out ai, but they have a lot of criticism from for their european partners. we need our european friends to look to this new frontier with optimism rather than trepidation. calling attention to gdpr and how difficult it can be for companies to deal with gdpr. and the us is determined to be a leader in this space. we unfortunately have run out of time for today, but we will be back tomorrow and we'll continue recapping it all for you and digesting it. i'm julianna tatelbaum worldwide exchange was up next.

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>> it's much more. >> interactive with jim. >> on a daily basis. so i'm able to stay on top. >> of. >> things and actually have gained. >> so much knowledge. >> i watched the morning meeting just about every day. it really kicks off. the day provides a good framework. on what he thinks is going on for today. >> get invested. join the club today. go to cnbc.com. slash join jim. it is 5 a.m. here. at cnbc. >> global headquarters. >> welcome to worldwide exchange. >> here is your five at five. fed chairman. >> jay powell. >> looks to. >> cut through the. >> noise with two days. >> of testimony on. >> capitol hill. >> that starts today. president trump. with a flurry of new executive. >> actions targeting u.s. >> trade. >> government oversight and business interests overseas. this morning. more allies turn rivals are responding. >> sticking with washington. >> and a looming d.c. deadline that could put the trump agenda on. >> ice, plus. >> the elon musk sam altman saga, it takes a very unexpected turn. >> and later, a check. >> on the supermicro stock pop ahead of a potential. nasdaq delisting. >> it is tuesday